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SA’s Transport Industry Feeling The Pinch

The slowing world economy is impacting both South Africa’s international transport volumes, as well as local rail and pipeline volumes, the Ctrack Transport and Freight Index shows.

The latest Ctrack TFI indicates a slower trend in transport volumes during September 2019.

Trans NovThe Ctrack TFI also reflects a far weaker SA economy than was the case between April and June, when all indications were that growth was back in full swing, according to the index report.

Economist Mike Schüssler, who is involved in compiling the index, told Fin24 on Friday that the slow-down in world trade is having a negative impact on SA’s broader logistics industry.

“In manufacturing, factory owners are being squeezed by slow domestic demand and export volume uncertainty. The decline of nearly 10% between July and September compared to the same three months a year ago is worrisome,” states the index report.

The storage sector is also impacted, with both retail and manufacturing storage in decline. The decline in storage, however, is more due to conditions in SA’s internal economy, according to Schüssler.

“The storage decline indicates that consumers and factories in SA are under a lot of pressure and the business sector is reflecting that. Businesses simply don’t want to be caught with too much stock on hand. You can see it in all the specials on currently,” Schüssler told Fin24.

“If this trend continues, it would be worrisome, especially if it leads into November and December. December is in any event no longer the big buying month, due to Black Friday in November.”

Both air and sea freight volumes have been relatively weak performers for the best part of two years now, according to the index report. Sea freight and air freight volumes continue to feel the effects of the US-Sino trade war and Brexit, according to the index report.

Furthermore, air traffic volumes between Africa and the rest of the world is growing at about 8%, although from a very low base. SA’s domestic air freight volumes, however, are in decline and not growing other than to certain African and Middle Eastern destinations.

At the same time, the latest index shows that, despite a slower domestic economy and a weaker international trade environment, SA’s land freight remains in a relatively stable position.

Road freight volumes grew 2.5% while rail freight volumes edged up 0.2% between July and September 2019 compared to the same three-month period in 2018.

“Weak business confidence levels need to be addressed as soon as possible, since capital investment only takes place when businesses are confident and certain about the future,” the index report suggests.

“Transport operators will have to monitor their costs and performance closely. Risks must be contained as much as possible too, while opportunities remain hard to come by.”

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